No rush to sell Virgin
The Scottish Media Group is to undertake a fully underwritten Rights Issue of New Shares to raise approximately £95.1 million. The money would be used to reduce debt, and would mean SMG could hold-out for a better price for Virgin Radio.
In a statement released today, SMG say the Board is committed to maintaining an efficient capital structure. Subject to this objective, the Directors intend that any net cash proceeds from the possible sale of Virgin Radio will be returned to shareholders in as tax efficient manner as possible.
[i]The Board continues to believe that the Group's future lies in its television business, associated broadcast and new media opportunities.[/i]
Commenting, Rob Woodward, Chief Executive, SMG plc said: 'The Board of SMG believes that the Rights Issue is an important step in the transformation of the Group's balance sheet. It will significantly reduce debt, substantially decrease interest payments, allow flexibility in timing of
disposals and ensure that we can now focus fully on achieving our broadcasting KPIs. Despite difficult market conditions we are on track to deliver
substantial cost savings and have targeted the reduction of our indebtedness as the next stage in transforming the business. With a much strengthened balance sheet and additional financial resources, the Directors believe that SMG will now be well placed to maximise the opportunities available to the Group.'